Smart & Final posts Q2 sales surprise

Smart & Final Stores on Tuesday reported higher than expected comparable-store sales results during its fiscal second quarter, though total sales and profits came in slightly below Wall Street estimates.

The Commerce, Calif.-based retailer said higher store traffic during the period, offset by slightly smaller average orders and easing deflation, accounted for a comp increase of 1.3%. Wall Street was anticipating a same-store sales decline of 0.1%. Smart & Final’s first-quarter comps were down by 2.5%.

“The second quarter marked a return to positive comparable store sales growth, reflecting the expected lessening of pressures from deflation and growth-related sales cannibalization, as well as from customer growth attributable to our strong competitive position,” David Hirz, president and CEO, said in a statement. “We expect sales growth will continue to be supported by the maturation of new stores opened over the past two years, as well as marketing and promotional initiatives aimed at increasing store traffic and building basket size.”

Smart & Final said revenues for the period, which ended June 18, totaled $1.1 billion, a 3.9% increase, and net income of $7.1 million or 9 cents per share. Adjusted net income was $11 million or 14 cents a share, a penny below analyst estimates.

Gross margin as a percent of sales was 15% as compared to 15.1% for the same period last year.

The company on Tuesday also narrowed the top ranges of its full-year financial guidance, saying it now expected net sales growth of 5.5% to 6% (down from 6.5%) and comps in the range of 1% to 1.5% (previously 1% to 2%) and adjusted EPS of 50 to 52 cents (previously 50 to 55 cents).

Smart & Final operates 314 grocery and foodservice stores under the Smart & Final, Smart & Final Extra! and Cash & Carry banners on the West Coast.